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5 Cards in this Set
- Front
- Back
Transaction Motive |
The main reason that people hold money - to buy things |
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Nonsynchronization of income and spending |
The mismatched between the timing of money inflow to the household and the timing of money outflow for household expenses. |
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Speculation Motive |
One reason for holding bonds instead of money: Because the market price of interest-bearing bonds is inversely related to the interest rate, investors may want to hold bonds when interest rates are high with the hope of selling them when interest rates fall. |
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Tight Monetary Policy |
FED policies that contract the money supply and thus raise interest in an effort to restrain the economy. |
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Easy Monetary Policy |
FED policies that expand the money supply and thus lower interest rates in an effort to stimulate the economy. |